economics of piracy

“in somalia, the economic model for piracy is working well. in 2010, the US, EU and the UK gave the country a combined $298m in aid – less than half the sum pocketed by the pirates when light aircraft dropped waterproof containers full of cash into the waters near their beach settlements.” (here.)

first, this is likely (should you be off the cost of the horn of africa), as piracy now, like piracy in antiquity but less like the early modern period, is largely about kidnapping

negotiators should seem willing to walk away

do not reveal that you have kidnapper’s insurance (or other info about capacity to pay)

the going ransom rate is not relevant to your bargaining situation

“when the hostage’s party is negotiating a ransom with pirates both the pirates and hostages may be behaving in ways that are ultimately consistent with a game of chicken under conditions of bounded rationality and bayesian inference about asymmetric information, but in the immediate subjective sense they may simply be feeling that the recent run of ransoms sets an expectation of what it is fair to pay for this particular hostage”